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OrthoPediatrics Corp.'s (NASDAQ:KIDS) Profit Outlook

Simply Wall St

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OrthoPediatrics Corp.'s (NASDAQ:KIDS): OrthoPediatrics Corp., a medical device company, designs, develops, and markets anatomically appropriate implants and devices for the treatment of children with orthopedic conditions in the United States and internationally. On 31 December 2018, the US$567m market-cap posted a loss of -US$12.0m for its most recent financial year. The most pressing concern for investors is KIDS’s path to profitability – when will it breakeven? In this article, I will touch on the expectations for KIDS’s growth and when analysts expect the company to become profitable.

View our latest analysis for OrthoPediatrics

Consensus from the 5 Medical Equipment analysts is KIDS is on the verge of breakeven. They expect the company to post a final loss in 2020, before turning a profit of US$5.3m in 2021. Therefore, KIDS is expected to breakeven roughly 2 years from today. What rate will KIDS have to grow year-on-year in order to breakeven on this date? Using a line of best fit, I calculated an average annual growth rate of 83%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

NasdaqGM:KIDS Past and Future Earnings, April 9th 2019

I’m not going to go through company-specific developments for KIDS given that this is a high-level summary, though, keep in mind that by and large a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before I wrap up, there’s one aspect worth mentioning. KIDS has managed its capital judiciously, with debt making up 26% of equity. This means that KIDS has predominantly funded its operations from equity capital,and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of KIDS to cover in one brief article, but the key fundamentals for the company can all be found in one place – KIDS’s company page on Simply Wall St. I’ve also put together a list of relevant aspects you should further examine:

  1. Historical Track Record: What has KIDS's performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on OrthoPediatrics’s board and the CEO’s back ground.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.